TSLA - Tesla Motors

[wescobrk]

Today it's worth $3,800,000.  It grew by roughly 38,000%.  Well, it did"

 

Nice!! Even with just an all stock index fund you'll probably have close to $30 million by age 59. Slightly better performance than the index and you'll be a centimillionaire!

Any special plans at 59?

[rkbabang]

Example:

 

You have $10,000 contributed to your RothIRA in January 2003.  You paid $2,500 tax bill at that time (25% tax rate).

 

Today it's worth $3,800,000.  It grew by roughly 38,000%.  Well, it did  ;D

 

So... what if instead I had done this in a Regular IRA?  Well I would have needed to grow the $2,500 by a similar 38,000%.  In my taxable account???  No such luck -- the annual tax drag would not allow it.  The difference could be really expensive because when the compounding numbers get high, the tax drag really starts to grind.

 

At 60% compounding the $2,500 would have grown by only 15,000%, to $375,000.  That's nowhere near enough to settle the $950,000 tax liability (at 25%).  But worse, today the tax rates are 40% if you're taking out that much money at once.  The tax rates of just 25% are a dream now.  Worse still, the top income tax rate in California (where I now live) is 52% (for a whopping $1,976,000 in tax liability).

 

So by paying the tax early you could say that I grew a $2,500 tax liability into $1,976,000 (at California's rate).  That's 79,000%!  In just 10.6 years!

 

But what if instead of depositing $10k into the Roth and paying $2.5K in taxes, you deposited $12.5K into a traditional IRA and earned 38000%.  You'd have almost $1M more in your IRA to grow for another 19 years.  And if you get out of CA before starting to withdraw it you would avoid the crazy state taxes altogether.

[LC]

Example:

 

You have $10,000 contributed to your RothIRA in January 2003.  You paid $2,500 tax bill at that time (25% tax rate).

 

Today it's worth $3,800,000.  It grew by roughly 38,000%.  Well, it did  ;D

 

So... what if instead I had done this in a Regular IRA?  Well I would have needed to grow the $2,500 by a similar 38,000%.  In my taxable account???  No such luck -- the annual tax drag would not allow it.  The difference could be really expensive because when the compounding numbers get high, the tax drag really starts to grind.

 

At 60% compounding the $2,500 would have grown by only 15,000%, to $375,000.  That's nowhere near enough to settle the $950,000 tax liability (at 25%).  But worse, today the tax rates are 40% if you're taking out that much money at once.  The tax rates of just 25% are a dream now.  Worse still, the top income tax rate in California (where I now live) is 52% (for a whopping $1,976,000 in tax liability).

 

So by paying the tax early you could say that I grew a $2,500 tax liability into $1,976,000 (at California's rate).  That's 79,000%!  In just 10.6 years!

 

But what if instead of depositing $10k into the Roth and paying $2.5K in taxes, you deposited $12.5K into a traditional IRA and earned 38000%.  You'd have almost $1M more in your IRA to grow for another 19 years.  And if you get out of CA before starting to withdraw it you would avoid the crazy state taxes altogether.

 

I always thought the only differential factor in making a decision of Roth vs. Traditional IRA was whether you expect to pay taxes at a lower rate when you deposit the money versus when you withdraw.

[rpadebet]

Example:

 

You have $10,000 contributed to your RothIRA in January 2003.  You paid $2,500 tax bill at that time (25% tax rate).

 

Today it's worth $3,800,000.  It grew by roughly 38,000%.  Well, it did  ;D

 

So... what if instead I had done this in a Regular IRA?  Well I would have needed to grow the $2,500 by a similar 38,000%.  In my taxable account???  No such luck -- the annual tax drag would not allow it.  The difference could be really expensive because when the compounding numbers get high, the tax drag really starts to grind.

 

At 60% compounding the $2,500 would have grown by only 15,000%, to $375,000.  That's nowhere near enough to settle the $950,000 tax liability (at 25%).  But worse, today the tax rates are 40% if you're taking out that much money at once.  The tax rates of just 25% are a dream now.  Worse still, the top income tax rate in California (where I now live) is 52% (for a whopping $1,976,000 in tax liability).

 

So by paying the tax early you could say that I grew a $2,500 tax liability into $1,976,000 (at California's rate).  That's 79,000%!  In just 10.6 years!

 

But what if instead of depositing $10k into the Roth and paying $2.5K in taxes, you deposited $12.5K into a traditional IRA and earned 38000%.  You'd have almost $1M more in your IRA to grow for another 19 years.  And if you get out of CA before starting to withdraw it you would avoid the crazy state taxes altogether.

 

I always thought the only differential factor in making a decision of Roth vs. Traditional IRA was whether you expect to pay taxes at a lower rate when you deposit the money versus when you withdraw.

 

That is my understanding as well. If your expected tax rate on the way out is more than the current tax rate, you go with Roth else you go with tax deferred.

[ERICOPOLY]

But what if instead of depositing $10k into the Roth and paying $2.5K in taxes, you deposited $12.5K into a traditional IRA and earned 38000%. 

 

I was already doing that too.  I was maxing everything out that I could.  You can contribute only so much, after which you are forced to contribute excess savings to your taxable brokerage account.

 

Settling the tax bill early is like maxing out one more thing.  I like to think of paying the tax bill early as a "stealth" RothIRA contribution.  It's not technically a contribution, but it's just as valuable as putting that $2,500 in a RothIRA.  The difference is that you skip the formality -- instead of putting the $2,500 into an account where it grows tax-free, you just hand it directly over to the Treasury.

 

So really, if you don't settle the tax bill early you are losing out on one more addition way to make a contribution to tax-sheltered account with RothIRA-type tax characteristics.

 

See, I'm a bit weird -- I just explained how I handed tax money directly over to the Treasury and in the same post called this a tax shelter.  Some kind of tax shelter!  But it is. 

 

This IRA tax isn't merely an order of operations thing -- it isn't like 25% tax today is the same as a 25% tax in 50 years.  If you can afford to settle the tax bill today with money from your taxable account, it's best to go ahead and do so because your taxable account will not be able to compound at the speed of your tax-deferred accounts.  It's that simple.

[ERICOPOLY]

Aside from the inheritance and withdrawal rules....

 

$10,000 contributed to a RothIRA is just as good as having $10,000 in a regular IRA as well as being allowed to contribute another $2,500 to a RothIRA.

 

The guy with the regular IRA still gets $10,000 in a tax-deferred account, but his extra $2,500 is riding in a taxable brokerage account.

 

So you get to pack even more money into non-tax status.  That's why the Roth is better!

 

 

 

 

 

[muscleman]

Aside from the inheritance and withdrawal rules....

 

$10,000 contributed to a RothIRA is just as good as having $10,000 in a regular IRA as well as being allowed to contribute another $2,500 to a RothIRA.

 

The guy with the regular IRA still gets $10,000 in a tax-deferred account, but his extra $2,500 is riding in a taxable brokerage account.

 

So you get to pack even more money into non-tax status.  That's why the Roth is better!

 

I see. I think I misunderstood Roth. This year's traditional and Roth 401k limits are both $17500. I thought that means either I can put in $17500 pre-tax income into traditional 401k, or I can put in $17500 MINUS tax into Roth. But if I can actually put in $17500 into Roth, that is indeed more savings.

 

I am still choosing pre-tax because I expect to take money before 59.5. This means I only need to pay the 10% penalty plus the income tax. For Roth it wouldn't make sense to take money out before 59.5.

[ERICOPOLY]

There is another type of contribution that just rocks if you are planning on not working your entire career at the same company.

 

It's this...

I always maxed out the additional after-tax contribution that you are allowed to make to the 401k plan.  It amounts to 7% of your pay.  So if you make 100k salary, you can contribute another $7,000 after-tax this way.  This money is in addition to the $17,500 contribution you make.

 

So you can contribute $7,000 + $17,500 = $24,500 total contribution.

 

Here is why it's so great...  on the day you leave your job you can roll your 401k plan to an IRA.  The after-tax money goes directly to a RothIRA and the pre-tax money goes directly to a Rollover IRA.  You can later convert the Rollover IRA if you choose to RothIRA status, but that's optional.

 

So did you catch that?  Upon rollover out of your 401k, all of your after-tax contributions are treated exactly the same.  They all go to the Roth, even though the "extra 7% of pay" contribution exceeded the amounts you are normally allowed to contribute to a RothIRA.

 

The only difference between the two is that the earnings/gains on the Roth401k contributions also flow directly to the RothIRA upon rollover, but in the case with the "extra 7% of pay" contributions the earnings/gains on them go to the regular Rollover IRA, because those are taxable gains/earnings.  But that distinction doesn't matter too much if you plan on leaving the company relatively early as I did.

 

Anyways, that's what I did.  I maxed out everything all of the time.  Just bring out the big hickory and whack it.

[ERICOPOLY]

I am still choosing pre-tax because I expect to take money before 59.5. This means I only need to pay the 10% penalty plus the income tax. For Roth it wouldn't make sense to take money out before 59.5.

 

Five years after each Roth contribution, the amount of the contribution itself can be withdrawn completely tax free and without penalties.  So you can perhaps think of every contribution as if it were going to a tax-free fund with a 5 year lockup (subject to 10% penalty for early withdrawal before the 5 year lockup period expires). 

 

Still not enough money?  Try this:

 

0)  Roll your 401k plan into IRAs

1)  convert some (or all) of your Regular IRA to RothIRA  -- you pay only the income tax, no penalties here

2)  Wait 5 years and then you can withdraw all of the money (without the 10% penalty) that you converted to Roth status in the prior step

 

So I'm trying to tell you that you can completely avoid the 10% penalty if you use the Roth as a tool to accomplish early withdrawal.

 

Then, if that's still not good enough, you can make the "substantially equal periodic payments" deal where you agree to take out a fixed amount each and every year until you are 59.5.  On this money you pay only income tax, not penalties.  This is referred to as "annuitizing your IRA".  You can look that up.

 

Oh, when I was an employee I spent a lot of time daydreaming and researching about how to get out of the company early.  I think I figured out a few valuable "tricks" -- really, not too tricky as it's just playing by the rules as they were made.

[muscleman]

I am still choosing pre-tax because I expect to take money before 59.5. This means I only need to pay the 10% penalty plus the income tax. For Roth it wouldn't make sense to take money out before 59.5.

 

Five years after each Roth contribution, the amount of the contribution itself can be withdrawn completely tax free and without penalties.  So you can perhaps think of every contribution as if it were going to a tax-free fund with a 5 year lockup (subject to 10% penalty for early withdrawal before the 5 year lockup period expires). 

 

Still not enough money?  Try this:

 

0)  Roll your 401k plan into IRAs

1)  convert some (or all) of your Regular IRA to RothIRA  -- you pay only the income tax, no penalties here

2)  Wait 5 years and then you can withdraw all of the money (without the 10% penalty) that you converted to Roth status in the prior step

 

So I'm trying to tell you that you can completely avoid the 10% penalty if you use the Roth as a tool to accomplish early withdrawal.

 

Then, if that's still not good enough, you can make the "substantially equal periodic payments" deal where you agree to take out a fixed amount each and every year until you are 59.5.  On this money you pay only income tax, not penalties.  This is referred to as "annuitizing your IRA".  You can look that up.

 

Oh, when I was an employee I spent a lot of time daydreaming and researching about how to get out of the company early.  I think I figured out a few valuable "tricks" -- really, not too tricky as it's just playing by the rules as they were made.

 

Wow! Thank you so much for these valuable advice! :)

[ERICOPOLY]

Now you can rent a Model S in California from Hertz:

 

http://money.cnn.com/2013/09/25/autos/tesla-rent-hertz/index.html?iid=HP_LN

 

I wonder if the rentals are allowed to charge for free at the superchargers?

[fareastwarriors]

http://online.wsj.com/article/SB10001424052702303722604579111052383880112.html?mod=WSJ_business_whatsNews

 

 

Tesla Sedan Roars Ahead in Norway

 

Norway Has Relatively Small Market But Buyers Are Affluent

[ERICOPOLY]

http://online.wsj.com/article/SB10001424052702303722604579111052383880112.html?mod=WSJ_business_whatsNews

 

 

Tesla Sedan Roars Ahead in Norway

 

Norway Has Relatively Small Market But Buyers Are Affluent

 

 

Let me guess why. 

 

1) $10 a gallon for gas in Norway

2)  No value added tax on electric vehicles making a Tesla Model S the same cost as a Volkswagon Passat

3)  Great car

4)  Cheap hydro-generated electricity

[muscleman]

http://online.wsj.com/article/SB10001424052702303722604579111052383880112.html?mod=WSJ_business_whatsNews

 

 

Tesla Sedan Roars Ahead in Norway

 

Norway Has Relatively Small Market But Buyers Are Affluent

 

 

Let me guess why. 

 

1) $10 a gallon for gas in Norway

2)  No value added tax on electric vehicles making a Tesla Model S the same cost as a Volkswagon Passat

3)  Great car

4)  Cheap hydro-generated electricity

 

What? The Tesla S is the same price as a Passat in Norway? :o

[fareastwarriors]

http://www.usatoday.com/story/money/cars/2013/10/02/tesla-fire-stock-falls-analyst-downgrade/2911345/

 

Tesla stock burned by car fire video, downgrade

[siddharth18]

Example:

 

You have $10,000 contributed to your RothIRA in January 2003.  You paid $2,500 tax bill at that time (25% tax rate).

 

Today it's worth $3,800,000.  It grew by roughly 38,000%.  Well, it did  ;D

 

So... what if instead I had done this in a Regular IRA?  Well I would have needed to grow the $2,500 by a similar 38,000%.  In my taxable account???  No such luck -- the annual tax drag would not allow it.  The difference could be really expensive because when the compounding numbers get high, the tax drag really starts to grind.

 

At 60% compounding the $2,500 would have grown by only 15,000%, to $375,000.  That's nowhere near enough to settle the $950,000 tax liability (at 25%).  But worse, today the tax rates are 40% if you're taking out that much money at once.  The tax rates of just 25% are a dream now.  Worse still, the top income tax rate in California (where I now live) is 52% (for a whopping $1,976,000 in tax liability).

 

So by paying the tax early you could say that I grew a $2,500 tax liability into $1,976,000 (at California's rate).  That's 79,000%!  In just 10.6 years!

 

 

 

Hey,

 

Not the nitpick here, but the income tax rate is calculated marginally and the amount of state income tax is deducted from total income for federal income tax purposes. So the effective tax rate comes to around 46% by my calculation.

 

Nevertheless, still extremely punitive. It's like you're paying the price for regulators' mismanagement/misdeeds.

 

Cheers.

[indythinker85]

Ericopoly Jr. right here ;)

 

http://www.valuewalk.com/2013/08/tesla-motors-inc-tsla-investment-earns/

 

This sounds almost identical to articles about Apple at the peak (no position in TSLA, but i think its totally speculative 'investment') http://www.huffingtonpost.com/2012/02/27/apple-shareholders_n_1303926.html

[rkbabang]

http://online.wsj.com/article/SB10001424052702303722604579111052383880112.html?mod=WSJ_business_whatsNews

 

 

Tesla Sedan Roars Ahead in Norway

 

Norway Has Relatively Small Market But Buyers Are Affluent

 

 

Let me guess why. 

 

1) $10 a gallon for gas in Norway

2)  No value added tax on electric vehicles making a Tesla Model S the same cost as a Volkswagon Passat

3)  Great car

4)  Cheap hydro-generated electricity

 

What? The Tesla S is the same price as a Passat in Norway? :o

 

$10/gal gas, $80,000.00 for a Passat. It's a wonder anyone can afford to drive at all.

[rpadebet]

 

Up until now the stock was on fire, now the cars are also on fire  :P

 

Tesla on a true "Fire Sale" the last couple of days  :P

 

[Liberty]

Up until now the stock was on fire, now the cars are also on fire  :P

 

Tesla on a true "Fire Sale" the last couple of days  :P

 

Ha! You should have your own late night show  ;)

 

There were 187,500 highway vehicle fires in the US in 2011, and that's just on the highway.

 

http://www.nfpa.org/research/fire-statistics/the-us-fire-problem/highway-vehicle-fires

 

Unless they find something wrong with the car, I think it'll be a non-issue in the long run. Even the safest cars aren't invincible. If you cary around a lot of energy, either in a gas tank or a battery, there's potential for stuff to catch on fire.

[rpadebet]

Up until now the stock was on fire, now the cars are also on fire  :P

 

Tesla on a true "Fire Sale" the last couple of days  :P

 

Ha! You should have your own late night show  ;)

 

There were 187,500 highway vehicle fires in the US in 2011, and that's just on the highway.

 

http://www.nfpa.org/research/fire-statistics/the-us-fire-problem/highway-vehicle-fires

 

Unless they find something wrong with the car, I think it'll be a non-issue in the long run. Even the safest cars aren't invincible. If you cary around a lot of energy, either in a gas tank or a battery, there's potential for stuff to catch on fire.

 

If you thought driving a futuristic car running on battery was cool, wait until you see a car running on flames  :P

 

So what if the car caught fire, it is nothing a future OTA software update can't fix  :P

 

Have you seen Ghost Rider? That was just a bike on fire, we now make cars that do the same  :P

 

Yes we have the highest crash test rating. You should have stuck around a few minutes to see what happens later  :P

[ERICOPOLY]

You guys are funny.  Driving your cars with a tank full of gasoline.

 

 

[Aberhound]

 

Unless they find something wrong with the car, I think it'll be a non-issue in the long run. Even the safest cars aren't invincible. If you cary around a lot of energy, either in a gas tank or a battery, there's potential for stuff to catch on fire.

 

An engineering friend at Ballard told me that power density in Lithium ion batteries was an inherent problem as more density increases the risk of spontaneous combustion. Perhaps the problem is that there was too much pressure to extend range vs. preventing fire risk by reducing power density.

[ERICOPOLY]

 

Unless they find something wrong with the car, I think it'll be a non-issue in the long run. Even the safest cars aren't invincible. If you cary around a lot of energy, either in a gas tank or a battery, there's potential for stuff to catch on fire.

 

An engineering friend at Ballard told me that power density in Lithium ion batteries was an inherent problem as more density increases the risk of spontaneous combustion. Perhaps the problem is that there was too much pressure to extend range vs. preventing fire risk by reducing power density.

 

Then your friend should either get rid of his laptop, or store it outside when not in use. 

 

The Model S battery pack is 7,000 small batteries.  Part of the reasoning was to avoid the risk of spontaneous combustion.  This accident is not an example of spontaneous combustion. 

[rpadebet]

You guys are funny.  Driving your cars with a tank full of gasoline.

 

Eric - don't take this the wrong way. Those are just a few thoughts which came to my mind after I read the company response, see below. Full disclosure: Neither long nor short the car or the stock.

 

"Yesterday, a Model S collided with a large metallic object in the middle of the road, causing significant damage to the vehicle. The car's alert system signaled a problem and instructed the driver to pull over safely, which he did. No one was injured, and the sole occupant had sufficient time to exit the vehicle safely and call the authorities. Subsequently, a fire caused by the substantial damage sustained during the collision was contained to the front of the vehicle thanks to the design and construction of the vehicle and battery pack. All indications are that the fire never entered the interior cabin of the car. It was extinguished on-site by the fire department."

 

I think the incident is all hyped though. Who in their right mind would put a large metallic object in the middle of the road? ;D